Tuesday, September 11, 2018

NEW CONTRIBUTORY PENSION SYSTEM (NPS)

M.krishnan

Secretary General

Confederation of
Central Govt.

Employees &
Workers

Pension system was in vogue
in India for a century or more and the British Government during the
pre-independence era introduced Pension Rules for Government employees and thus
made it statutory. In the year 1982 Supreme
Court in its landmark judgement in Nakara’s case declared that -“as per
India’s constitution, Government is obliged to provide social and economic
security to pensioners and that Government retirees had the fundamental right
to pension.....Pension is not abounty nor a matter of grace depending upon
the sweet will of the employer.It is
not an ex-gratia payment, but a payment for past service rendered.It is a social welfare measure, rendering
socio-economic justice to those who in the hey days of their life, ceaselessly
toiled for their employers on the assurance that in their old age, they would
not be left in lurch.”

During the advent of
globalisation policies in 1980’s the pension reforms also started
simultaneously. IMF & World Bank started publishing so many reports and
documents emphasizing the need for pension reforms.They also started studying about the reforms
to be undertaken in the pension sector in India.In 2001,“IMF work paper on pension
reforms in India”and World Bank India specific report “India - the
challenge of old age income security”were
published. Their work reports emphasized that “Pension
obligations or promises made by the Governments which have potential of
exerting pressure on Govt. finances, have been a subject of increased
focus in
assessing medium to long term fiscal sustainability.” In tune with the
dictates of IMF and World
Bank BJP-led NDA Government appointed Bhattacharjee Committee in 2001
headed by
Ex-Chief Secretary of Karnataka, to study and recommend pension
reforms. Thus after creating ground for pension
reforms, under the pretext of implementing recommendations of
Bhattacharyya
Committee, the NDA Government introduced New Pension System called
Defined
Contributory pension system for all employees who join service on or
after 01-01-2004. The Congress-led UPA Government which came to
power in 2004 continued with the reforms and promulgated an ordinance to
legalise NPS. But UPA-I Govt. could not
pass the Pension Bill in Parliament due to stiff opposition of Left
Parties
supporting it. Later when UPA-II
Government came to power the Pension Regulatory and Development
Authority
(PFRDA) Bill was passed in the Parliament with the support of BJP, the
then
opposition party. Many State Governments
governed by political parties other than Left Parties, introduced
Contributory Pension
System for their employees from various dates after 2004. Left Front
Governments of Kerala, West Bengal
and Tripura refused to introduce the New Pension Scheme and they
continued with
the old defined benefit pension scheme. Congress-led
UDF Government introduced NPS in Kerala. After BJP coming to power in
Tripura also
Contributory Pension Scheme is
introduced recently. In West Bengal old
Pension Scheme continues even now. Not
only newly appointed Central and State Government employees, almost all
new
entrants of public sector and Autonomous bodies are also brought under
the
purview of NPS.

As per New Contributory
Pension Scheme an amount of 10% of pay plus Dearness Allowance will be deducted
each month from the salary of the employees covered under NPS and credited to
their pension account.Equal amount is
to be credited by the Government (employer) also.Total amount will go to the Pension Funds
constituted under the PFRDA Act.From
the pension fund the amount will go to the share market.As per the PFRDA Act - “there shall not be
any implicit or explicit assurance of benefit except (share) market based
guarantee mechanism to be purchased by the subscribers”.Thus the amount deposited in Pension Fund may
or may not grow depending on the fluctuations in the share market.After attaining 60 years of age i.e., at the
time of retirement, 60% of the accumulated amount in the Pension Account of the
employee will be refunded and the balance 40% will be deposited in an Insurance
Annuity Scheme.Monthly amount received
from the Insurance Annuity Scheme is the monthly pension i.e., Pension is not
paid by Government, but by the Insurance Company and hence NPS is nothing but
Pension Privatization..

Thus it can be seen that the
growth of the accumulated amount in the Pension fund depends upon the vagaries
of share market.If the share markets
collapse, as happened during the 2008 world financial crisis, then the entire
amount in the pension fund may vanish.In that case employee will not get any pension.Every fluctuation in the share market will
affect the future of pension of those employees who are covered under NPS.Uncertainty about pension and retirement life
looms large over their heads.Even if
there is a stabilized share market the 40% amount in the annuity scheme is not
enough to get 50% of the last pay drawn as pension, which is the minimum
pension as per old pension scheme. Many employees who entered in service after 01-01-2004
has retired in 2017 and 2018 after completing 12 & 13 years of service.
They are getting Rs.1400- to Rs.1700- only as monthly pension from Insurance
Annuity Scheme. If they have entered service in 2003 i.e., in the old pension
scheme, they would have got 50% of the last pay drawn as pension subject to a
minimum of Rs.9000- as minimum pension, that too without giving any monthly
contribution towards pension from their salary. In short, NPS is nothing but NO
PENSION SYSTEM.

As per clause 12(5) of the
PFRDAAct even the employees and
pensioners who are not covered under NPS, can be brought under the Act by a
Gazette notification by the Government.Thus
NPS is a Damocles’ sword hanging over the head of all employees and pensioners.

Who is the beneficiary of
this pension reforms?As in the case of
every neo-liberal reforms, the ultimate beneficiary is the Corporates.The huge amount collected from the workers
through pension fund is invested in share market by the Pension Fund Managers
and this amount in turn can be utilied by the multi-national Corporates for
multiplying their profit.Amount
deducted and credited to the Pension fund from each newly recruited employees
plus the employer’s share amount will remain with the pension fund and share
market for a period of minimum 30 to 35 years i.e., till the age of 60
years.During this long period of 35
years crores and crores of rupees will be at the disposal of share market
controlled by multinational corporate giants.Ultimate causality will be the poor helpless employee/pensioner.

Confederation of Central
Government Employees and Workers and All India State Government Employees
Federation (AISGEF) has been opposing the NPS from the very beginning and a one
day strike was conducted on 30th October 2007.It was one of the main demand in all other strikes during these
period.The campaign and struggle
against NPS continued and as of now the subjective and objective conditions for
a bigger struggle against NPS has emerged as almost 50% of the total employees
in Central, State, Public sector and Autonomous bodies are now covered under
NPS and are becoming more and more restive and agitated.7th Central Pay Commission Chairman Retired
Supreme court Judge Sri. Asok Kumar Mathur has correctly pointed out that “Almost
a whole lot of Government employees appointed on or after 01-01-2004, were
unhappy with New Pension Scheme.Govt.
should take a call to look into their complaint”.

As per the
recommendations of 7th CPC, Central Government appointed a Committee
called “NPS Committee” for streamlining the functioning of NPS. The Staff-side
has demanded before this Committee to scrap NPS and guarantee for 50% of the
last pay drawn as minimum pension subject to a minimum of Rs.9000-. Even
though, the Committee has submitted its report 18 months back, the Government
has not yet disclosed the recommendations of the Committee.

Confederation
and AISGEF has decided countrywide intensive campaign culminating in one day
strike on 15th November 2018 demanding that the Defined Contributory Pension
Scheme (New Pension Scheme - NPS) imposed on new entrants must be scrapped and the
Government should reintroduce the Defined Benefit Pension Scheme (Old Pension
Scheme - OPS) that was in vogue for a century or more. We are also exploring the
possibility of organizing an indefinite strike in the coming days exclusively on
one demand i.e., SCRAP NPS, RESTORE OPSfor
which wider consultations are being made with all like-minded organizations.